Economics 101

(Originally published January 21st, 2013)

The Population Growth Rate fell during the Sixties and Seventies from 19% to 11% due to Birth Control and Abortion

Taxpayers are born. Yes, immigration helped populate America. But it was really the children of immigrants that made the country grow. For a large population having babies will increase the population far more than immigration can. Why? Where do immigrants come from? Babies. Having babies is like compounding interest. For babies grow up and have babies of their own. So babies are good. Especially for a government that wants to spend money. Because the more babies we have the more taxpayers we will have. So high-spending governments need a growing population growth rate. To provide ever more taxpayers. Who provide ever more tax revenue. But sometimes the population growth rate doesn’t always increase. Sometimes it even falls. (See Population, Housing Units, Area Measurements, and Density: 1790 to 1990. The population numbers are from the decennial census numbers. The population growth rate is the percentage of population growth from one decade to the next.)

Although the population has always grown the population growth rate has not always grown. In fact, the rate of growth has been falling over time. Taking steep declines during war. During the American Civil War the growth rate fell from 36% down to 23% by the time of the next census. The census before and after World War I saw a decline from 21% to 15%. The rate plummeted from 16% to 7% before and after the Great Depression. With so many people out of work and struggling to survive the last thing families needed was another baby to feed. The rate actually increased during World War II. But that had more to do with people not having babies during the Great Depression for economic reasons. After World War II the rate rose to 14%. Which was still a point less than after World War I.

Note that the most devastating of American wars was the American Civil War. Where approximately 2% of the population died. In terms of percentage loss of population the next costliest war was the Revolutionary War. Then World War II. Then World War I. These wars saw millions of men in uniform (except for the Revolutionary War). Away from their wives for years. Which put a crimp in baby making. And the large number of wounded and dead compounded that problem. Resulting in large dips in the population growth rate during these wars. Despite the large loss of life in numbers of America’s other wars those losses were all less than 0.10% of the population. Making the impact on the population growth rate negligible. One thing these numbers don’t explain, though, is the decline in the population growth rate after 1960. During the Sixties and the Seventies the growth rate fell from 19% down to 11%. But it wasn’t the Vietnam War that caused that decline. So what did? Birth control. And abortion.

Couples having only 2 Children can’t Support an Expanding Welfare State but Couples having 3 Children Can

The U.S. approved the sale of the birth control pill in 1960. Which corresponded with the era of free love and the sexual revolution. People were having more sex. While having fewer babies. Then Roe v. Wade made abortion legal in 1973. Since then there have been on average about 1.4 million abortions a year. Dwarfing the 156,250 killed a year in America’s most devastating war. The American Civil War. Which has brought the population growth rate to its smallest numbers that weren’t due to war or depression. Because of that compounding nature of babies (growing up to have babies of their own). And because babies become taxpayers this has a big impact on future tax revenue. We can see this by looking at how 100 abortions ripple through the population.

Let’s assume those 100 abortions happen in Year 1 (Y1). Had these abortions not happened these babies would have grown up and entered the workforce about 20 years later (Y1+20). And split off into pairs to have babies of their own. (If each couple has one baby they have a total of 50 babies. If each couple has two babies they have a total of 100 babies. Etc.) Who would grow up and enter the workforce about 20 years later (Y1+40). And so on. The above graph adds up all the people for each 20-year period produced by the Y1 babies (children, grandchildren, great grand children, etc.) divided by 100 (those original babies not aborted).

If the Y1 people only have one baby they and their descendants disappear from the world in about 2 centuries. If they have 2 children the population never grows larger than 4 times the original Y1 people. Two children to replace two parents. It’s not until you get to three children that you see an increase in population. As well as an increase in tax revenue.

Assume each of the people, or taxpayers, at 20-year intervals earn a median income of $50,000. They pay an effective federal income tax rate of 18%. In addition to 12.4% for Social Security taxes (both employer and employee). And 2.9% for Medicare. Added together they total 33.3%. This tax rate on total income at each 20-year interval produces the tax revenue in the above graph. Note the revenue graphs are the same shape as the population graphs. Showing a direct correlation between tax revenue and the population growth rate. The tax revenue provided by couples having only one child disappears within two centuries. Revenue provided by couples having only two children peaks out at $6,660,000. As couples only have enough children to replace themselves. Maintaining a constant of 4 taxpayers (2 parents and 2 children) after 80 years. Showing that couples having 2, 1 or 0 children cannot support an expanding welfare state. But a couple having 3 children can. As long as it’s not too big of a welfare state.

You just can’t have an Expanding Welfare State with a Falling Population Growth Rate

The more children a couple has the greater the tax revenue. For the more children they have the more people enter the workforce and become taxpayers. If 50 couples have 3 kids each (as do their descendants) they will add $30.4 million in federal tax revenue in one century. If they have 4 kids they will add $99.9 million in revenue. If they have 5 kids they will add $264 million. And if they have 6 kids they will add $599.4 million.

In two centuries these numbers are even more profound. Couples having 4 kids will provide $3.2 billion in federal tax revenue. While couples having 5 kids will provide $25.8 billion. And couples having 6 kids will provide $145.6 billion. If, that is, 100 pregnancies weren’t aborted 2 centuries earlier.

In the long-term revenue would soar if people simply started having babies again. For birth control and abortion have greatly reduced the number of babies we’re having. Causing tax revenue to fall. We can bring revenue back up by having more babies. But after some 30 years this baby dearth has pushed us into the flat part of these graphs. Requiring up to a century or more to make large population gains. And large gains in tax revenue. And without these gains in revenue we simply cannot afford an expanding welfare state.

It is rather ironic that two tenets of liberalism clash here. Liberals believe in both a welfare state. And free birth control and abortion on demand. They believe in one thing that requires women to have a lot of babies. And another that helps women to have as few babies as possible. Which is another reason liberalism will ultimately fail. Paradoxes like this. For you just can’t have an expanding welfare state with a falling population growth rate. If you try you get trillion dollar deficits. And $16.4 trillion in accumulated debt.